After staying in the $6000 range for the past few months, Bitcoin’s price suddenly shot up in the past few days crossing the $7000 mark. The past few days have been some of the best days of the cryptocurrency market in the past few months.
The cryptocurrency market was making all sorts of headlines in 2017 and it seemed that the trend would continue in 2018. However, as more governments started to crack down on digital currencies due to different reasons, currencies such as Bitcoin, Ethereum and Ripple suffered the most and the rest soon followed. The cryptocurrency market is no longer the giant it once was and one can also tell by looking at GPU prices these days as they’ve more or less come back to normal now.
Of course, the crypto market is nowhere near as valuable and profitable as it once was as there was a time when Bitcoin almost hit $20,000. However, given the current state of the market, the increase can only be positive, especially when most of the people that joined the market to make a quick buck are now gone.
Being the largest, and oldest cryptocurrency in the world, Bitcoin’s price movements can have a big impact on the rest of the market. Bitcoin’s rise in prices was also accompanied by a rise in prices for other cryptocurrencies such as Ethereum, Stellar etc. The overall market cap has jumped from around $247 million to $278 million as a result of this. However, what triggered the sudden increase in prices of cryptocurrencies? There’s a possible explanation.
The reason why BTC’s price suddenly surged
Usually, when a reputable firm shows interest in something, especially cryptocurrency, then eventually said thing attracts a lot of attention. This has happened before as well when people like John McAfee endorsed a few cryptocurrencies after which the prices for these digital tokens skyrocketed.
Similarly, investment giant BlackRock recently showed some interest in cryptocurrency. When news broke out that Blackrock was interested in investigating cryptocurrencies and the Blockchain technology, Bitcoin started to increase in price. Blackrock isn’t the only one still interested in cryptocurrency, because the technology behind it is fascinating and one for the future.
Many people forgot the real purpose of cryptocurrency because it became all about making money off of the inflating digital tokens. Cryptocurrency uses complex Blockchain technology that grows over time and offers solutions to real-world problems that aren’t achievable through fiat currency. Firms looking into the blockchain technology is proof that they also see a future where crypto could be useful.
Firms like Blackrock investing in crypto is only good for the market, as it would help bring some legitimacy for an asset that needs a lot of it. Mathew Newton, a market analyst at the investment platform eToro told The Independent:
“After a few weeks in the doldrums, news like this goes a long way in lending legitimacy to crypto as an asset class, which is powerful over the long-term”.
Newton also went on to say that investors should still remain cautious, because if the prices start to increase too fast, then we could end up triggering another bubble. Newton and others predict that if prices reach $8,000, then there are possibilities for the digital token to reach a new all-time high, which doesn’t really benefit anyone in the long run.
Impressive action in price & volume the past few days.
Breaking 8K soon is crucial (monthly resistance)
If we break it, then everything under 7k was just a ugly bear-trap and we should start our journey to a new ATH. $BTC #bitcoin pic.twitter.com/JLj2RS7CGA
— Galaxy (@galaxybtc) July 18, 2018
There are many other examples of credible firms like Blackrock showing their interest in cryptocurrency. Some of them introduce their own digital coin that looks to overcome the limitations of fiat currency while also trying to avoid the limitations of cryptocurrency, trying to achieve the balance, almost making a hybrid of fiat and digital currency.
Many experts believe that as more firms from the financial sector express their interests in cryptocurrency, the more likely it is for fiat currency to somehow merge with cryptocurrency in the future.
“There is no doubt BlackRock is looking at the options when it comes to cryptocurrenciess. This is logical given that many in the City, including asset managers, are already exploring ways to enter the market,” Romal Almazo, cryptocurrency lead at consultancy firm Capco, told The Independent.
Cryptocurrency is still relatively new, and now might be the best time for firms to invest in them, and explore them fully. After all, not many people are interested in crypto anymore apart from those interested in the technology and the benefits it could have in the future. Blockchain technology is really at the center of cryptocurrency and if people can learn more about it, then cryptocurrency could very well be a legitimate asset in a few years.
There is still the risk of the renewed interest turning into another bubble which would see cryptocurrency prices rise exponentially again. However, the reason why prices were able to shoot so high up before was due to little or no regulation. Now that countries are regulating the crypto market, it shouldn’t be too bad even if a new bubble starts.